Correlation Between Lithium Americas and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Lithium Americas and Anheuser Busch at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lithium Americas and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Americas Corp and Anheuser Busch Inbev, you can compare the effects of market volatilities on Lithium Americas and Anheuser Busch and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lithium Americas with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Anheuser Busch.
Diversification Opportunities for Lithium Americas and Anheuser Busch
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lithium and Anheuser is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Lithium Americas is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lithium Americas Corp are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Lithium Americas i.e., Lithium Americas and Anheuser Busch go up and down completely randomly.
Pair Corralation between Lithium Americas and Anheuser Busch
Given the investment horizon of 90 days Lithium Americas Corp is expected to generate 3.62 times more return on investment than Anheuser Busch. However, Lithium Americas is 3.62 times more volatile than Anheuser Busch Inbev. It trades about -0.01 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.22 per unit of risk. If you would invest 321.00 in Lithium Americas Corp on September 13, 2024 and sell it today you would lose (6.00) from holding Lithium Americas Corp or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Americas Corp vs. Anheuser Busch Inbev
Performance |
| Timeline |
| Lithium Americas Corp |
| Anheuser Busch Inbev |
Lithium Americas and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Anheuser Busch
The main advantage of trading using opposite Lithium Americas and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas position performs unexpectedly, Anheuser Busch can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Anheuser Busch will offset losses from the drop in Anheuser Busch's long position.| Lithium Americas vs. Infosys Ltd ADR | Lithium Americas vs. Meiwu Technology Co | Lithium Americas vs. Arrow Electronics | Lithium Americas vs. Zhihu Inc ADR |
| Anheuser Busch vs. Boston Beer | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Ambev SA ADR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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